Opinion
F081857
08-15-2022
AYALA BORING, INC., Plaintiff and Appellant, v. HPS MECHANICAL, INC., et al., Defendants and Respondents
Mahoney &Soll, Paul M. Mahoney and Richard A. Soll for Plaintiff and Appellant. McCartney Dallmann and N. Thomas McCartney for Defendants and Respondents.
NOT TO BE PUBLISHED
OPINION APPEAL from a judgment of the Superior Court of Kern County. No. BCV-19-102029, Stephen D. Schuett, Judge.
Mahoney &Soll, Paul M. Mahoney and Richard A. Soll for Plaintiff and Appellant.
McCartney Dallmann and N. Thomas McCartney for Defendants and Respondents.
DETJEN, ACTING P.J.
Plaintiff and appellant Ayala Boring, Inc. (Ayala) appeals from an August 18, 2020 judgment of the Kern County Superior Court granting summary judgment in favor of defendants and respondents HPS Mechanical, Inc. (HPS) and American Contractors Indemnity Company (American Contractors). The court found that Ayala's various causes of action were barred by relevant statutes of limitations as well as the doctrine of res judicata.
This is the third appeal involving Ayala and HPS. (See Ayala Boring, Inc. v. HPS Mechanical, Inc. (Mar. 19, 2021, D076054) [nonpub. opn.] (Ayala II); Ayala Boring, Inc. v. HPS Mechanical, Inc. (Sept. 17, 2018, D070176) [nonpub. opn.] (Ayala I).)
On appeal, Ayala makes two principal contentions. First, "there was a triable issue of fact regarding the defense of statute of limitations." (Capitalization omitted.) Second, "there was a triable issue of fact regarding the defense of res judicata." (Capitalization omitted.) For the reasons set forth below, we conclude Ayala's claims are time-barred and affirm the summary judgment order.
Given our disposition, we need not address the issue of res judicata. In addition, we necessarily reject the ancillary argument that-in the event the judgment is reversed-HPS's attorney's fees and costs award must be vacated.
FACTUAL AND PROCEDURAL HISTORY
In 2009, HPS entered into a contract with the City of San Diego (City) to serve as the prime contractor for City's South Mission Valley trunk sewer project (Project). HPS then entered into a subcontract with Ayala, an underground pipeline boring contractor. Pursuant to the subcontract, Ayala would receive $394,700 for installing casings and sewer lines under Interstate 8 at two Project locations. One location was near the interchange of Interstate 8 and Interstate 15 (Interchange Site), where Ayala would bore a 260-foot tunnel under Interstate 8, install a 36-inch diameter casing, pressure grout the casing, and install a 24-inch customer-furnished sewer pipe through the casing. (Ayala II, supra, D076054; Ayala I, supra, D070176.)
"Citation of [the] prior unpublished opinion[s] does not violate California Rules of Court, rule 8.1115(a) because '[w]e . . . cite the decision[s] to explain the factual background of the case and not as legal authority.' [Citation.]" (The Utility Reform Network v. Public Utilities Com. (2014) 223 Cal.App.4th 945, 951, fn. 3.)
On September 22, 2010, Ayala mobilized and began its work at the Interchange Site. Four days later, Ayala encountered large rocks, boulders, and/or other materials that were larger than anticipated and required excavation by hand. It notified HPS of the different site conditions and requested compensation for the extra labor. Ultimately, City, HPS, and Ayala agreed to a change order that would pay Ayala an additional $203,000. Ayala completed its work at the Interchange Site sometime in January 2011. Near the end of that month, the Department of Transportation advised City that Interstate 8's concrete pavement at or around the Interchange Site had "heaved," i.e., risen, as a result of the construction activities and instructed City to fix the damage. City ordered HPS to correct the heave. HPS, which believed that the heave was caused by the pressure grouting, directed Ayala to perform repairs. However, Ayala refused to do so when it learned that HPS intended to withhold the $203,000 change order payment until the heave was fixed. Subsequently, HPS performed repairs at a cost of $199,559.34. (Ayala II, supra, D076054; Ayala I, supra, D070176.)
In October 2011, Ayala filed what would become its operative complaint against HPS, alleging a cause of action for breach of contract and seeking payment for the extra labor performed at the Interchange Site due to the different site conditions and of other amounts that HPS wrongfully retained. In March 2015, HPS filed what would become its operative cross-complaint against Ayala, alleging a cause of action for breach of contract and seeking reimbursement of the repair costs. A jury trial commenced in January 2016. On the last day of trial, the San Diego County Superior Court granted Ayala's motion to amend its complaint to conform to proof and add a common count for money had and received. Thereafter, the jury returned special verdicts finding (1) in favor of HPS on Ayala's breach of contract claim; (2) in favor of Ayala on its common count for money had and received; and (3) in favor of Ayala on HPS's breach of contract claim. The jury calculated Ayala's damages to be $249,470 and the court entered judgment in that amount. The court also awarded Ayala prejudgment interest as well as attorney's fees and costs as the prevailing party on its complaint. (Ayala II, supra, D076054; Ayala I, supra, D070176.)
On appeal, Division One of the Fourth Appellate District reversed the judgment to the extent that it found in favor of Ayala on the common count for money had and received and reversed the award of prejudgment interest on the compensatory damages awarded by the jury. In addition, because of the then-mixed results obtained by the parties, the attorney's fees and costs awards were reversed. The superior court was directed on remand to conduct further proceedings and enter a new judgment consistent with the appellate opinion. (Ayala II, supra, D076054; Ayala I, supra, D070176.)
On remand, the San Diego County Superior Court denied HPS's motion for an award of attorney's fees as the prevailing party on the contract but granted various trial costs and costs on appeal, including expert witness fees, mediator fees, reporter's fees, and surety bond premiums. The court entered an amended judgment that found in favor of HPS on Ayala's complaint and ordered Ayala to pay HPS costs and disbursements totaling $205,095.63. (Ayala II, supra, D076054.) On appeal, Division One of the Fourth Appellate District affirmed the order denying attorney's fees and reversed the order awarding HPS costs and the amended judgment to the extent that they awarded expert witness fees and mediation fees. (Ayala II, supra, D076054.)
In a complaint filed in the San Bernardino County Superior Court on January 22, 2019, Ayala brought a third party beneficiary's claim for breach of written contract as well as claims for restitution and conversion against HPS, seeking "general damages in the sum of $249,700." This amount included the $203,000 change order payment, a $39,470 contract retention, and a $7,000 fee for an additional mobilization. In addition, Ayala brought a claim against American Contractors on a contractor's license bond issued and delivered to HPS, seeking "damages . . . in the sum of $15,000." In or around July 2019, the case was transferred from the San Bernardino County Superior Court to the Kern County Superior Court.
On March 2, 2020, HPS filed a motion for summary judgment. It pointed out that Ayala's interrogatory answers identified" '[t]he date that HPS withheld money . . . owing on the change order'" as" 'approximately May 2011.' " HPS added that it received the contract retention on December 29, 2014. In view of these dates, HPS argued that Ayala's causes of action "are barred by the statute[s] of limitations applicable thereto": Code of Civil Procedure section 337 (four years for breach of written contracts); section 338, subdivision (d) (three years for restitution); and section 338, subdivision (c)(1) (three years for conversion).
In its separate statement in opposition to HPS's summary judgment motion, Ayala does not dispute this fact.
In its separate statement in opposition to HPS's summary judgment motion, Ayala disputes this fact, stating it "never received the retention." However, this assertion does not refute that HPS received the retention on December 29, 2014. (See Cal. Rules of Court, rule 3.1350(f)(2) ["An opposing party who contends that a fact is disputed must state . . . the nature of the dispute and describe the evidence that supports the position that the fact is controverted."].)
Unless otherwise indicated, subsequent statutory citations refer to the Code of Civil Procedure.
Alternatively, HPS argued that "each cause of action in Ayala's complaint [is] barred in its entirety by the claim preclusion and issue preclusion principles of the doctrine of res judicata."
American Contractors also filed a motion for summary judgment on March 2, 2020. It likewise pointed out that Ayala's interrogatory answers identified" '[t]he date that HPS withheld money . . . owing on the change order'" as" 'approximately May 2011'" (see ante, fn. 5) and repeated HPS's avowal that it received the contract retention on December 29, 2014 (see ante, fn. 6). American Contractors added that HPS's license period "expires on March 31st every other odd numbered year" and the pertinent license period expired on March 31, 2015. In view of these dates, American Contractors argued that Ayala's claim on the contractor's license bond was barred by Business and Professions Code section 7071.11, which requires an action to be brought "[w]ithin two years after the expiration of the license period during which the act or omission occurred." (Bus. &Prof. Code, § 7071.11, subd. (c)(1).)
In its separate statement in opposition to HPS's summary judgment motion, Ayala does not dispute this fact.
Alternatively, American Contractors argued that "Ayala is barred under the claim preclusion aspect of the doctrine of res judicata from bringing this lawsuit against American Contractors."
On May 21, 2020, Ayala filed its opposition to the summary judgment motions. Regarding the statutes of limitations, Ayala argued that "[t]he limitations period[s] did not run because the action of HPS amounts to a continuing wrong that triggers the continuing accrual doctrine."
On June 8, 2020, the Kern County Superior Court conducted a summary judgment motion hearing. In a written ruling dated June 22, 2020, the court determined that "there is no triable issue as to any material fact and that HPS and American Contractors . . . are entitled to judgment as a matter of law on the grounds that Ayala's complaint is barred by . . . the applicable statutes of limitations," among other things. The court explained:
"A third party beneficiary is subject to the same limitations period as the promise[e] to the contract [that] created the rights of the beneficiary. [Citation.] The statute of limitations for breach of a written contract is four years. [Citation.] The date asserted by Ayala for the breach is May 2011. [Citation.] As the accrual of the cause of action would have occurred over seven years prior to the filing of the present complaint, it is barred by the statute of limitations. [¶] . . . [¶]
"Actions for unjust enrichment or restitution must be brought within three years. [Citation.] The alleged unjust enrichment cause of action here results from the failure of HPS to pay Ayala when HPS received the money from . . . City . . . in May, 2011. To recover on the change order amount, the statute of limitation[s] expired in May, 2014.
"With respect to the retention amount of $39,470, HPS received that amount in December 2014. The statute of limitations on any claim for the retention would have run in December 2017. [¶] . . . [¶]
"An action for taking, retaining, or injuring any goods or chattel must be brought within three years. [Citation.] The statute of limitations begins to run at the time of the alleged conversion. [Citation.] Ayala's claim for conversion is based on the alleged taking of $249,700 paid by . . . City . . . to HPS for the benefit of Ayala. Any wrongful taking occurred in May 2011 when HPS refused to pay the money to Ayala with respect to the change order amounts. For the retention amount, the statute of limitations would have run in December 2017. [¶] . . . [¶]
"Ayala does not dispute the arguments of HPS related to the applicable statutes of limitation[s]. It asserts that . . . the doctrine of continuous accrual . . . [is an] exception[] to the statute[s] of limitations applicable here[.]
"While the courts have developed a handful of equitable exceptions to or modifications of the normal application of the statutes of limitation[s], those exceptions are not applicable here. Ayala relies on the continuing wrong accrual principle. There are two main branches to this rule, the continuing violation doctrine and the theory of continuous accrual. [Citations.]
"Under the continuous accrual theory, a continuing wrong may be viewed as triggering its own limitation[s] period. These kinds of cases in which the continuous accrual theory have been applied include a variety of instances in which the plaintiff has asserted to or challenged money due under a contract or under a statute or regulation. [¶] . . . [¶]
"However, here there is no continuous wrong which would trigger the continuing accrual doctrine. Nor is there an ongoing breach that would trigger a new limitation[s] period with each successive breach. Here, there is only one alleged claimed obligation to pay and one failure to pay. [¶] . . . [¶]
“The fourth cause of action against American Contractors seeks to recover on the surety bond issued by it to HPS for its work on the South Mission Valley Trunk Sewer project. Ayala asserts that it is a person for whose benefit the bond was issued and that Ayala has been damaged by HPS's diversion of funds it received for the work and has failed to pay those funds to Ayala in violation of section 7108 of the Business and Professions Code.
"Under Business and Professions Code section 7071.1, an action on the bond must be brought within two years after expiration of the license period in which the act or omission occurred.
"HPS's failure to pay occurred in May 2011....HPS's license expires March 31 of every other odd-numbered year....HPS's license . . . expired in 2015.... Based on this fact, HPS's license would have previously expired on March 31, 2015 and 2015 would be the license period that triggered the statute of limitation[s] on a May 2011 failure to pay claim. Consequently, the claim against American Contractors is barred by the statute of limitations as the claim would have to have been filed before March 31, 2017."
Judgment was entered on August 18, 2020.
DISCUSSION
I. Overview of summary judgment law
Summary judgment "provide[s] courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar); see Lee v. Marchetti (1970) 4 Cal.App.3d 97, 99 [" 'The salient philosophy behind this procedural device is to provide a method for the prompt disposition of actions and proceedings which have no merit and in which there is no triable material issue of fact ....'" (italics omitted)].) A motion for summary judgment "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact." (§ 437c, subd. (c).)
A defendant seeking summary judgment bears an initial burden to produce evidence demonstrating either one or more elements of the cause of action cannot be established or there is a complete defense to that cause of action. (§ 437c, subd. (p)(2); Aguilar, supra, 25 Cal.4th at pp. 849-850, 854-855.) "The burden on a defendant moving for summary judgment based upon the assertion of an affirmative defense is heavier than the burden to show one or more elements of the plaintiff's cause of action cannot be established." (Anderson v. Metalclad Insulation Corp. (1999) 72 Cal.App.4th 284, 289.) "Instead of merely submitting evidence to negate a single element of the plaintiff's cause of action, . . . 'the defendant has the initial burden to show that undisputed facts support each element of the affirmative defense' [citations]." (Ibid., italics omitted; see Kids' Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878-879 [preponderance of the evidence standard of proof].)
If the defendant makes a prima facie showing, then the burden of production "shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto." (§ 437c, subd. (p)(2).) Specifically, where the defendant raises an affirmative defense, "the burden shifts to the plaintiff to show there is one or more triable issues of material fact regarding the defense after the defendant meets the burden of establishing all the elements of the affirmative defense." (Jessen v. Mentor Corp. (2008) 158 Cal.App.4th 1480, 1484; see Vahle v. Barwick (2001) 93 Cal.App.4th 1323, 1328 ["The plaintiff need not produce any evidence until the defendant has established every element of his or her defense."].) "The plaintiff . . . shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto." (§ 437c, subd. (p)(2); accord, Aguilar, supra, at p. 849.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar, supra, at p. 850, fn. omitted.)
"[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar, supra, 25 Cal.4th at p. 850, fn. omitted.)
Whereas a burden of production entails only the presentation of evidence, a burden of persuasion entails the establishment of a requisite degree of belief by way of such evidence. (Aguilar, supra, 25 Cal.4th at p. 850.)
II. Standard of review
"When reviewing the grant of a motion for summary judgment or summary adjudication, we independently consider whether a triable issue of material fact exists and whether the moving party is entitled to summary judgment or adjudication as a matter of law." (Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 631, fn. omitted.) "In other words, we must assume the role of the trial court and reassess the merits of the motion. [Citation.] In doing so, we will consider only the facts properly before the trial court at the time it ruled on the motion. [Citation.]" (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1601.)
"We apply the same three-step analysis required of the trial court. First, we identify the issues framed by the pleadings since it is these allegations to which the motion must respond. Second, we determine whether the moving party's showing has established facts which negate the opponent's claim and justify a judgment in the moving party's favor. When a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable issue of material fact." (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493-494.) "Our obligation is '" 'to determine whether issues of fact exist, not to decide the merits of the issues themselves.'"' [Citation.] We must' "consider all of the evidence" and "all" of the "inferences" reasonably drawn therefrom [citation], and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party.' [Citations.]" (See's Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 900.)
III. Analysis
"An affirmative defense, the statute of limitations exists to promote the diligent assertion of claims, ensure defendants the opportunity to collect evidence while still fresh, and provide repose and protection from dilatory suits once excess time has passed." (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191 (Aryeh).) "The duration of the limitations period marks the legislatively selected point at which, for a given claim, these considerations surmount the otherwise compelling interest in adjudicating on their merits valid claims." (Ibid.) "The limitations period, the period in which a plaintiff must bring suit or be barred, runs from the moment a claim accrues." (Ibid.; see § 312.) "A cause of action accrues 'when [it] is complete with all of its elements'-those elements being wrongdoing, harm, and causation." (Pooshs v. Philip Morris USA, Inc. (2011) 51 Cal.4th 788, 797; see Aryeh, supra, at p. 1191 ["This is the 'last element' accrual rule: ordinarily, the statute of limitations runs from 'the occurrence of the last element essential to the cause of action.' "].)
"A defendant moving for summary judgment based on the affirmative defense of the statute of limitations carries its burden by presenting evidence establishing that the plaintiff's claim is time-barred." (Genisman v. Carley (2018) 29 Cal.App.5th 45, 49.)" 'It then falls to plaintiff[] to counter with evidence creating a dispute about a fact relevant to that defense.' [Citation.] That is, the plaintiff must submit evidence that would allow a 'reasonable trier of fact [to] find in plaintiff['s] favor on the statute of limitations issue.' [Citations.]" (Ibid.)
In the instant case, various limitations periods are at play. For a third party beneficiary's claim for breach of a written contract, the statute of limitations is four years. (§ 337, subd. (a); Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1410.) For a claim of restitution or unjust enrichment (see Dinosaur Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1314 [restitution and unjust enrichment "synonymous"]), the statute of limitations is three years. (See § 338, subd. (d) ["action for relief on the ground of fraud or mistake"]; Prakashpalan v. Engstrom, Lipscomb &Lack (2014) 223 Cal.App.4th 1105, 1132 ["Ordinarily, restitution is required only if' "the benefits were conferred by mistake, fraud, coercion or request."' "].) Likewise, the statute of limitations for a conversion claim is three years. (§ 338, subd. (c)(1); Pearce v. Briggs (2021) 68 Cal.App.5th 466, 486.) Finally, an action against a contractor's license bond must be brought "[w]ithin two years after the expiration of the license period during which the act or omission occurred." (Bus. &Prof. Code, § 7071.11, subd. (c)(1).)
On appeal, the parties appear to agree that-in the absence of any accrual exceptions-these statutes of limitations would begin to run on either May 2011 or December 2014. Ayala essentially concedes that it failed to bring its causes of action within the designated limitations periods. Instead, it contends:
"[I]t is clear that the limitations period[s] did not run because the action of HPS amounts to a continuing wrong that triggers the continuing accrual doctrine. Simply put, HPS cannot keep the $249,470. The $249,470 belonged to Ayala, and it would be unjust enrichment for HPS to be able to keep the money, most of which was paid by the City of San Diego to HPS for the benefit of Ayala...."
In its opening brief, Ayala briefly identifies the discovery rule and the continuing violation doctrine but does not "support each point by argument ...." (Cal. Rules of Court, rule 8.204(a)(1)(B).) "We will not develop the [plaintiff's] arguments for [it]" (Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn. 1) and will deem any contentions based upon these accrual exceptions waived or abandoned.
"[U]nder the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period." (Aryeh, supra, 55 Cal.4th at p. 1192.) "Generally speaking, continuous accrual applies whenever there is a continuing or recurring obligation: 'When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period.' [Citation.] Because each new breach of such an obligation provides all the elements of a claim-wrongdoing, harm, and causation [citation]-each may be treated as an independently actionable wrong with its own time limit for recovery." (Id. at p. 1199.)
We find that the theory of continuous accrual does not apply here. The crux of Ayala's lawsuit is HPS's failure to pay the amount owed on the change order in May 2011 and the contract retention in December 2014. No periodic, recurring obligation is implicated. (Cf. Aryeh, supra, 55 Cal.4th at p. 1200 [monthly fraudulent billing in equipment lease]; Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 819-822 [monthly imposition and collection of purportedly invalid municipal tax]; Baxter v. State Teachers' Retirement System (2017) 18 Cal.App.5th 340, 378-382 [incorrect monthly pension benefits]; Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1341-1346 [nonpayment of quarterly royalties].)
Accordingly, we conclude Ayala's claims are time-barred and affirm the summary judgment order.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to defendants and respondents HPS Mechanical, Inc. and American Contractors Indemnity Company.
WE CONCUR: MEEHAN, J., DE SANTOS, J.